Agriculture is a leading contributor to poverty reduction in Bangladesh since 2000, a new World Bank report said. The country now needs to shift towards high-value agriculture, including horticulture, livestock, and fisheries as well as greater value addition to improve farmers’ income and household nutrition.

The report launched on May 17, “Dynamics of Rural Growth in Bangladesh: Sustaining Poverty Reduction,” says pro-poor agricultural growth has stimulated the non-farm economy. It estimates that a 10 percent rise in farm income generates a 6 percent rise in non-farm income. Hence, the growth of the non-farm economy largely depends on agriculture. Although rural non-farm employment is almost 2 times higher than all urban employment put together, non-farm activities are not progressing sufficiently in scope or sophistication. The report calls for greater attention to foster a robust rural non-farm economy.

“Bangladesh has raised agricultural productivity significantly in the last few decades. It is remarkable that, with so many people and so little arable land, the country has been able to provide sufficient food for almost everyone,” said Qimiao Fan, World Bank Country Director for Bangladesh, Bhutan and Nepal. “While rice will remain its focus, Bangladesh needs to find effective ways to diversify its agriculture, as well as adapt to a changing climate.”

Bangladesh is widely recognized for its progress in human development, but its achievements in agriculture remain little known. Several factors supported the sector’s growth: extensive irrigation, high-yielding varieties, more efficient markets, and mechanization, all backed by policy reforms and investments in agriculture research, human capital, and roads.

The country needs to invest more in research on non-rice crops, livestock, and fishery as well as infrastructure to support the shift towards high-value agriculture. Today, the largest share of public expenditure on agriculture goes to subsidies. Almost half of the farmers overuse fertilizers. Excessive amount of chemical fertilizers are creating environmental and health hazards.

“The market operates smoothly in Bangladesh. The country now needs upgraded market facilities, increased investments in roads to connect secondary cities, improved rural logistics and access to finance to move to the next level, with more modern and efficient supply chains,” said Madhur Gautam, Team Leader for the study. “These improvements will help increase income and productivity, and they are especially important as Bangladesh transitions to a more modern food system involving high-value products and greater value addition.”

The study is undertaken in partnership with the Planning Commission of the Government of Bangladesh. The study identifies key changes in the rural economy, principal drivers of rural income, policy implications, and actions needed to foster growth, reduce poverty, and improve food security and nutrition.